Expedia (EXPE) Pops on Positive UBS Report

NEW YORK (TheStreet) -- Shares of Expedia (EXPE) rose 5% to $65.88 during Monday's session following a research note from UBS analyst Eric Sheridan.

Sheridan improved his target price for Expedia stock to $74 from $70 and maintained a "buy" rating for the stock.

In his research note Sheridan said, "Expedia management has focused the company on growth initiatives for long-term value creation."

He cited the acquisition of Trivago, an investment in Chinese travel company eLong (LONG), and an agreement with Travelocity as examples of good moves made by the company.

TheStreet Ratings team rates EXPEDIA INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate EXPEDIA INC (EXPE) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, expanding profit margins, growth in earnings per share and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • EXPE's revenue growth has slightly outpaced the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 16.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for EXPEDIA INC is currently very high, coming in at 84.07%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.18% is above that of the industry average.
  • EXPEDIA INC's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EXPEDIA INC reported lower earnings of $2.16 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($3.15 versus $2.16).
  • In its most recent trading session, EXPE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: EXPE Ratings Report

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